CT DEVELOPERS LTD. ANNOUNCES PRIVATE PLACEMENT AND PROPOSED QUALIFYING TRANSACTION

November 4, 2020 – Vancouver, British Columbia (TSX-V: DEV.P). CT Developers Ltd. (“CT” or the “Company”), a capital pool company, is pleased to announce that it has entered into a letter of intent (the “LOI”) dated October 26, 2020 with Magna Mining Corp. (“Magna”), which outlines the general terms and conditions of a proposed transaction (the “Proposed Transaction”) that will result in CT acquiring all of the issued and outstanding shares of Magna (the “Magna Shares”), in exchange for shares of CT (each a “CT Share”). In addition, each convertible, exchangeable, or exercisable security of Magna shall be exchanged for a convertible exchangeable, or exercisable security, as applicable, of CT on substantially the same economic terms and conditions as the original convertible, exchangeable or exercisable security of Magna. The Proposed Transaction is currently expected to be completed by way of a three-cornered amalgamation or share exchange between CT and Magna or other similar transaction which will result in Magna becoming a wholly-owned subsidiary of CT.

 

The LOI will be superseded by a definitive agreement (the “Definitive Agreement”) between CT and Magna with such agreement to include representations, warranties, conditions and covenants typical for a transaction of this nature. The Proposed Transaction is subject to, among other things, receipt of the requisite shareholder approval of Magna, final approval of the TSX Venture Exchange (the “Exchange”) and standard closing conditions, including the conditions described below. The parties have agreed that during the period from signing the LOI through to execution of the Definitive Agreement, Magna will continue its operations in the ordinary course and that CT will not solicit or accept alternative offers (subject to fiduciary duties).

 

CT is a capital pool company (a “CPC”) currently listed on the NEX because it did not complete a qualifying transaction (“Qualifying Transaction”) pursuant to Policy 2.4 – Capital Pool Companies (the “Policy”) of the Exchange Corporate Finance Manual. The Proposed Transaction will constitute the Company’s Qualifying Transaction.

 

The Proposed Transaction is not a Non Arm’s Length Qualifying Transaction pursuant to Section 2.1 of the Policy and, as such, the Company is not required to obtain shareholder approval for the Proposed Transaction. However, the Company intends to hold its annual and special meeting of shareholders to approve certain matters ancillary to the Proposed Transaction, including a name change, a consolidation of the CT Shares and change in the board of directors, upon closing of the Proposed Transaction (“Closing”), as well as standard annual meeting business.

Upon completion of the Proposed Transaction, CT will continue with the business of Magna and Magna will be its wholly‐owned, subsidiary (the Company after the Proposed Transaction being referred to herein

as the “Resulting Issuer”).

 

Private Placement of CT Shares

 

Prior to and independent of the Proposed Transaction, CT intends to complete a non-brokered private placement of CT Shares for gross proceeds of $200,000 by the issuance of 2,000,000 CT Shares at a price of $0.10 per CT Share (the “CT Placement”). The CT Placement will be completed independently of the Proposed Transaction. The proceeds from the CT Placement will be used for general and administrative purposes.

 

Terms of the Proposed Transaction

 

It is currently anticipated that the Proposed Transaction will be effected by way of a share exchange or amalgamation whereby CT will acquire all of the issued and outstanding Magna Shares in consideration for the issuance to each shareholder of Magna (a “Magna Shareholder”) of 1.625 CT Shares (the “Exchange Ratio”) for each Magna Share held by such holder. Subject to shareholder approval, in connection with the Proposed Transaction, CT will complete a consolidation of the issued and outstanding CT Shares on the basis of 4 pre-consolidation CT Shares for 1 post-consolidation CT Share (the “Consolidation”).

 

All CT Shares issued pursuant to the Proposed Transaction, except those certain CT Shares issued to U.S. persons who are affiliates (as defined in Rule 144(a)(1) under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”)) of Magna at the time the Proposed Transaction is submitted for vote or consent by the shareholders of Magna, will be freely tradable under applicable securities legislation but may be subject to restrictions on resale imposed by the Exchange.

 

Certain of the CT Shares to be issued to Magna Shareholders pursuant to the Proposed Transaction, including up to 100% of the securities to be issued to “Principals” (as defined under applicable laws), may also be subject to escrow provisions imposed pursuant to the policies of the Exchange.

 

None of the securities to be issued pursuant to the CT Placement, Proposed Transaction or Financing have been or will be registered under the U.S. Securities Act, or any state securities laws, and any securities issued pursuant to the Proposed Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

 

It is currently anticipated that all of the current officers and directors of CT will resign from their respective positions with CT and that the insiders of the Resulting Issuer will include: Jason Jessup, as a director and Chief Executive Officer, Derrick Weyrauch, as a director and Chief Financial Officer, Paul Fowler, as a Senior Vice President, and the following directors: Vern Baker, Carl DeLuca and John Seaman.

 

Concurrent Financing of Subscription Receipts

 

In connection with the Proposed Transaction, the parties intend to complete a brokered private placement financing (the “Financing”) of subscription receipts for gross proceeds of approximately $5,000,000 at an estimated price of $0.65 per subscription receipt. Each subscription receipt will converted into securities of CT on the basis of the Exchange Ratio. As a result, CT Shares issued on the conversion of the subscription receipts will be issued at an effective price of $0.40 per CT Share after giving effect to the Consolidation and the Exchange Ratio. Once finalized, the specific terms of the Financing will be disclosed in a subsequent news release.

 

The proceeds of the Financing are intended to provide sufficient funds for: (1) the recommended work program provided for in Magna’s most recent National Instrument 43-101 technical report; (2) general and administrative expenses for 12 months following the Closing; and (3) a minimum of $100,000 in unallocated working capital.

 

Conditions to Proposed Transaction

 

The Proposed Transaction is expressly subject to: (i) a satisfactory due diligence review by each of CT and Magna; (ii) the negotiation, execution and delivery of a definitive agreement between the parties (the “Definitive Agreement“); (iii) receipt of all necessary approvals, including without limitation from the Exchange, the board of directors of CT, the board of directors of Magna, the Magna Shareholders and the shareholders of CT, as required; and (iv) the satisfaction of the conditions to Closing to be set out in the Definitive Agreement.

 

The LOI may be terminated by either party if: (a) the Definitive Agreement is not executed on or before December 31, 2020; (b) the conditions become, in the commercial opinion of either party acting reasonably, impossible to fulfil; (c) either party is not satisfied with the results of their due diligence investigations of the other party; or (d) the parties mutually agree to terminate the LOI.

 

It is expected that upon Closing, the Resulting Issuer will be listed on the Exchange as a Tier 2 Mining Issuer. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

 

About Magna

 

Magna was incorporated under the Business Corporations Act (Ontario) on December 2, 2016. Magna is a junior mining company primarily focused on the acquisition, exploration and development of advanced and highly prospective polymetallic (Ni-Cu-PGM) deposits in the Sudbury region of Ontario, Canada. Magna’s flagship asset is the past producing Shakespeare Mine (currently on care & maintenance) with year-round exploration access on their highly prospective 123 km2 property position. Major permits and approvals are in place for the construction of a 4,500-tpd open pit mine, processing plant and tailings storage facility.

 

Jason Jessup exercises control or direction over 26.9% of the Magna Shares. No other Magna Shareholders currently hold more than 20% of the Magna Shares currently issued and outstanding.